Wednesday, December 18, 2019

US economy continues to beat expectations; Sterling returns gains from elections after Johnson renews no-deal Brexit worries

Tags
  • Dollar
  • Gold
  • Pound
  • Stocks

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Market Recap: US economy continues to beat expectations; Sterling returns gains from elections after Johnson renews no-deal Brexit worries

US equities inched slightly higher thanks to upbeat economic data in the US. Industrial production grew 1.1% in October, beating economists’ estimates for a 0.9% growth. Housing Starts also beat expectations, growing to 1,365,000 in November. The recent slew of positive economic data in the US has helped to subdue fears of a recession and has supported the Fed’s optimistic economic outlook for the US. Major indices in the US gained as a result on Tuesday.

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Renewed threat for a no-deal Brexit sent sterling freefalling on Tuesday. British Prime Minister Boris Johnson signalled on Tuesday that he will be taking a hard line on trade talks with the EU during the transition period. He also said that he will not be requesting for an extension to the December 31st 2020 deadline for the transition period, which will effectively put a no-deal Brexit back on to the table.

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Meanwhile safe haven assets were mixed on the day, as investors weighed the risk from the renewed possibility of a no-deal Brexit and an improving US economy. Gold remained mostly flat, while the yen gained against the dollar.  US Treasuries were mixed, with benchmark 10-year yields gaining 1bp to 2.31%.

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In Asia, major indices started Wednesday’s trading session mixed, with the Nikkei opening the trading session 0.15% higher while the Straits Times Index was 0.18% lower. But Asian equities may be facing losses today, after paring out gains on Wednesday as concerns surrounding Brexit and the details of the US-China phase one trade deal heighten.

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Today’s macro events include inflation rates from the UK, Eurozone and Canada at 5.30pm, 6pm and 9.30pm (GMT +8) respectively. Also, New Zealand’s GDP for Q3 2019 will be released tomorrow at 5.45am (GMT +8).